Gold Outlook - August 2026

Monthly Overview -

After falling sharply in June, July has brought in some stabilisation for gold. The metal recovered toward the $4,100 - 4,200/oz¹ zone mid-month before slipping back below $4,050/oz by 23–24 July¹ as Middle East tensions and rate expectations pulled in opposite directions. Gold remains down close to 8.5% year-to-date in USD terms, even as it is still up over 20% on a trailing twelve-month view. Domestically, gold has broadly mirrored the international correction, though the import-duty hike in May and rupee depreciation have cushioned local prices, leaving domestic gold prices up roughly 6% YTD² even as the international price is down over the same period. Local discounts to the landed cost, unusual for the Indian market, have persisted through July, averaging US$20 - 40/oz, a function of ample domestic supply led by old-gold exchange volumes². If July were a mood ring, it would have flickered between calm and anxious more times than most investors would like to count.

Key Drivers Through July

1. Geopolitics: US - Iran conflict intensified as the month progressed, with US strikes on Iranian military infrastructure followed by retaliatory action by Iran-aligned forces against US-linked assets in Kuwait, Bahrain and Jordan, and attacks on tankers extending the confrontation to a second shipping corridor via the Red Sea. The US House approved funding of up to $95bn tied to the conflict, and by 24 July, Brent crude had pushed past US$100/barrel for the first time since May¹.

2. Monetary policy: Markets lifted the probability of a hike and firmer US real yields, hovering near the top of a three-year range, together with a resilient dollar, remained the principal headwinds for the non-yielding metal.

3. Trade policy: The Fresh US tariffs of 10–12.5% on 60 trading partners, covering most US imports, added a further layer of risk aversion across asset classes during the month with inflationary on one hand, growth-negative on the other, both of which are positive for gold.

4. Positioning: The money-manager net longs on COMEX rebounded through the month to around 370.6 tonnes by mid-July, even as broader open interest stayed near its lowest levels since 2009 a tentative sign of returning interest rather than a full-blown rush back into the metal³.

Flows & Demand - Latest Trends

1. Official sector: Central-bank accumulation, led by the PBoC's (Public Bank Of China) ongoing gold-buying streak, now running close to two years (20 consecutive months) without interruption, has remained a steady feature of the market through the year, continuing to underpin demand even as prices have gyrated. If anything, the pace has been picking up rather than tapering off - the PBoC added an estimated 9.95 tonnes in May and 14.93 tonnes in June, its largest single-month addition since 2023, taking official reserves to approximately 2,346 tonnes as on 7th July’ 2026.⁴

2. Global ETFs: The flows have turned broadly negative through the month, led by outflows in North America and Asia even as Europe posted modest inflows, a reminder that positioning, and not price alone, is shaping the investment flows.⁵

3. India²: Bucking the global trend, domestic gold ETFs continued to draw inflows into early July (an estimated INR 12.1bn over 1–10 July), building on renewed investor participation, while digital gold purchases via UPI have also stayed resilient. Jewellery demand has continued recovering through July after a seasonally soft patch, aided by an active old-gold-exchange trend and retailer promotions ahead of the festive run-up.

   Central banks, as ever, have kept up their steady, unhurried buying through all of this, patiently proving that many a little makes a mickle, committed to increasing reserve.

Outlook - What to Expect in August

The single biggest swing factor remains how the Iran conflict evolves. Continued escalation would likely keep energy prices and inflation expectations elevated, reinforcing the case for tighter policy - a combination that has so far worked against gold even amid heightened uncertainty. A de - escalation could instead ease both the inflation and risk-premium components together, a more two-sided outcome for prices heading into August. Official-sector buying is expected to remain a supportive, steady-state feature rather than a swing factor - central-bank accumulation has tended to persist through price volatility rather than react to it, and little in the current backdrop suggests a change of that pattern. Domestically, the festive calendar picks up through August (regional festivals and early wedding-season bookings), which should support jewellery demand alongside continuing ETF and digital-gold participation; the trajectory of import duty and the rupee will remain the key swing factors for overall demand into the month.

The Federal Open Market Committee left its target rate unchanged on31st July’ 2026), voting 9-3 to hold, an outcome the market had fully priced in, reflected in the muted initial reaction. The real market-mover came later, at Fed Chair Kevin Warsh's post-meeting press conference, where his apparent comfort with the recent rise in market interest rates triggered a sharp equity sell-off. We think it would be premature to read too much into the Fed's decision or Warsh's phrasing here. Three larger forces are impacting the markets right now: the rapid re-escalation of the Middle East conflict, which just three weeks ago appeared to be moving toward de-escalation; the unwinding of a bubble in semiconductor stocks; and a broad contraction in liquidity across the financial system. Against that backdrop, whether the Fed nudges rates up or holds steady is a secondary consideration. Going by the historical mid-term election-year pattern and given that the Fed shows no signs of moving toward decisive liquidity support, we expect equity markets to stay under pressure for at least the next two months, likely including a multi-week rebound at some point from whatever low gets set this week. Gold, meanwhile, has held its recent low despite these headwinds, which suggests a good part of the downside risk is already behind it. Some further consolidation still looks likely near-term, probably once restrictive liquidity conditions, rising real yields and dollar strength apply fresh pressure. August, in other words, opens with gold caught between the unease that keeps investors reaching for it, and the yields that keep tempting them away. This would be reflected in price as well with it drifting within the supported range.

Source : Bloomberg¹, World Gold Council (India Gold Market Update²; CFTC³; China Gold Market Update – June 2026⁴); Weekly Markets Monitor – 20 July 2026⁵.

Above article is authored by Quantum.

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